-50% Losses... Korean Investors in US ETFs Suffered Losses

Half of Top 20 Net Purchase Stocks End in Losses
Leveraged ETFs See 20% to 50% Declines

Over the past month, the U.S. stock market has been highly volatile due to the Trump administration's trade policies, resulting in significant losses for domestic individual investors who chose U.S. stocks over Korean stocks. In particular, popular U.S. leveraged exchange-traded funds (ETFs) among Korean investors suffered losses ranging from 20% to 50% during this period.

According to the Korea Securities Depository on the 9th, from the 5th of last month to the 4th of this month, the total net purchase amount of the top 20 U.S. stock items most bought by domestic investors reached $3.12 billion (approximately 4.0572 trillion KRW).

Analyzing the 'average account (customer) return' over one month for these 20 stocks based on big data from a major domestic securities firm's individual customers, half of the stocks?10 items?recorded losses. The average account return refers to the average profit or loss earned by the securities firm's customers who traded the specific stock during the period.

The top net purchase item, the 'Direxion Daily Tesla 2x ETF,' recorded an average account return of -30.69% over the month when converted to Korean won. This ETF uses leverage techniques such as derivatives to track the stock price of the U.S. electric vehicle company Tesla at twice the rate, resulting in high volatility and investment difficulty. The net purchase amount of this item by domestic investors over the month reached $785 million (1.1355 trillion KRW).

The stock with the largest loss was another leveraged ETF, the '2x Ethereum ETF,' which showed an average account return of -47.88%.

Other ETFs that recorded significant losses include the 'Grayscale 2x Coin ETF' (-39.95%), 'YieldMax Coin Option Income Strategy ETF' (-30.96%), 'YieldMax MSTR Option Income Strategy ETF' (-28.42%), 'Direxion Semiconductor 3x ETF' (-24.40%), and 'ProShares -2x Bloomberg Natural Gas ETF' (-21.87%). These ETFs are all 'high-risk ETFs' that amplify the price fluctuations of underlying assets by 2 to 3 times or invest in inherently highly volatile assets such as cryptocurrencies. Currently, these products cannot be launched or distributed by Korean financial institutions.

However, there are no regulatory restrictions under current laws on high-risk ETFs listed on the U.S. stock market, allowing domestic investors to freely invest in them.

Among U.S. individual stocks heavily purchased by domestic investors, the biotech companies 'Recursion Pharmaceuticals' and 'Tempus AI' suffered large losses, with average account returns of -24.82% and -21.25%, respectively, over the month.

On the other hand, some stocks yielded profits. AI software company Palantir Technologies had the highest return at 19.90%, followed by 'Invesco QQQ Trust SRS 1 ETF' (19.27%) and Alphabet, the parent company of Google (18.67%).

Tesla, known as a 'U.S. stock especially loved by Koreans,' recorded an average account return of 5.99% over the month. Although Tesla's stock price fell sharply by 28.06% during this period, the average account return likely reflects data from customers who purchased the stock at lower prices earlier. Tesla's net purchase amount by domestic investors over the past month was $736 million (1.0651 trillion KRW), ranking second after the 'Direxion Daily Tesla 2x ETF.'

The U.S. stock market experienced a boom until the end of last year, driven by the pro-business sentiment following Donald Trump's presidential election and the strong performance of large technology stocks (Big Tech) led by artificial intelligence (AI). This trend led domestic investors to favor U.S. stocks over Korean stocks. However, since Trump's inauguration in January this year, unprecedented tariff impositions and suspensions have caused maximum confusion, compounded by concerns over U.S. stock overvaluation and excessive investment in AI, causing significant turbulence in the U.S. stock market.

In contrast, the Korean stock market, which underperformed last year, has shown relative resilience to external shocks such as tariffs and has continued its rebound this year. The U.S. S&P 500 index fell 4.67% from 6061.48 on the 5th of last month to 5778.15 on the 4th of this month. During the same period, the KOSPI rose 0.78% from 2509.27 to 2528.92.